Thursday, October 7, 2010

Tax on tobacco products flouts WHO's norms, says study

 Tax levied by India on tobacco products is among the lowest in the entire Asia Pacific region, and at variance with the World Health Organization's norms. 

The findings have come to the fore, thanks to a comparative study conducted by Mary Assunta of South East Asia Tobacco Control Alliance ( SEATCA). 

While the WHO's recommendation say that 65% to 80% of the retail price of a tobacco product has to be taxed, the current tax levels for bidi and cigarette are 9% and 38%, respectively. 

Bidis are significantly under taxed as compared to filter cigarettes. Taxes on bidis in 2007-08 was Rs 14 per 1,000 sticks (for handmade bidis) and Rs 26 per 1,000 for machine-made bidis. 

A recent report estimated that between 52% and 70% of all bidis consumed in India did not pay any tax. 

Assunta's study reveals that in comparison to India, tax rate in Australia is 68%, Bangladesh (67%), Japan (63%), Malaysia (54%), Sri Lanka (77%) and Thailand (70%). 

Some other countries, which are yet to increase taxes on tobacco products include China (39%),Indonesia (37%), Phillipines (30%) and Vietnam (45%). 

Speaking to TOI, Assunta said, "research has showed that rising price of tobacco products by 10% in middle and low-income countries will result in reduction of consumption by 8%." 

Harley Stanton, president of Asia Pacific Conference on Tobacco or Health (APACT), which gets underway here on Thursday, said, "taxation is the single most important measure that countries can take in reducing tobacco consumption. What government's fail to understand is that the cost of caring for people, lost productivity and impact on children through second hand smoke is nearly four times higher than the tax collected by the government from tobacco products." 

"While the tobacco companies take home the profit, government and individuals have to pay for the tremendous health burden that tobacco causes. So it is absolutely essential that taxes on tobacco products are increased as per WHO's requirements. It's a win-win situation for a government, which not only collects more money from tobacco companies but the health care burden also decreases as smoking comes down," he added. 

Tobacco smoking kills one million Indians a year. But a recent report said a rise in excise tax of bidis and cigarettes could save around two crore lives. 

According to a recent report by leading Indian, American and Canadian economists as part of theBloomberg Initiative to Reduce Tobacco Use, if India increased its tax rate on bidis from Rs 14 to Rs 98 per 1,000 sticks (or, from 9 % to 40 % of retail price) and on cigarettes from Rs 659 to Rs 3691 per 1000 sticks (or, from 38% to 78% of retail price), 18.9 million Indians' lives could be saved. 

The report -- Economics of Tobacco and Tobacco Taxation in India that was released by Dr Govinda Rao of the National Institute for Public Finance and Policy and Dr Prabhat Jha of the Centre for Global Health Research --concludes that without strong action, over 51 million Indians face premature death due to tobacco consumption. 

According to the experts, tobacco-related illness and death cost the Indian government around Rs 30,000 crore. Bidi and cigarette smokers die 6 to 10 years earlier than their non-smoking counterparts. 

Tobacco taxes in India are not regularly adjusted for inflation, and over time tobacco products are becoming increasingly affordable, the report said. By 2020, tobacco will be responsible for 13% of all deaths in India, and it isestimates that without any intervention, more than 38.4 million and 13.2 million bidi and cigarette smokers, respectively, are likely to die prematurely. 

Raising taxes on cigarettes and bidis to internationally recommended levels will generate more than Rs 18,000 crore annually in new government revenues, which could be used to support efforts to reduce tobacco consumption and help bidi workers. Bidis account for 85% of tobacco smoked in the country. 

"Smoking accounts for one in 10 of all deaths -- half of them among the poor -- every year. The results highlight the crucial role that the government can play in reducing tobacco-related deaths by raising taxes on tobacco products," Dr Jha said. 

"Identifying measures to dissuade consumption of tobacco should be a high priority," Dr Rao suggested. 
Over 120 million Indians smoke, and 10% of the world's tobacco smokers live in India. India has the second largest group of smokers in the world after China. Almost a third of Indians -- 57% of all men and 11% of all women --consume some form of tobacco, and many use more than one type of tobacco product.